Tuesday, May 24, 2016

Debunking Austrian Economics 101 (Updated)

I have updated my “Debunking Austrian Economics 101” post below. Many new posts are now included, such as, for example, against Austrian price theory, the Rothbardian view of fractional reserve banking, and Austrian apriorism.

I have yet to see any substantive Austrian engagement with the Post Keynesian critique of their theories, and this is not really that surprising, since any moderately well-read person with a knowledge of Post Keynesian economics – informed by economic history and some decent background in analytic philosophy – could crush the Austrian cultists in debate without breaking a sweat.

Please note that not all the posts actually debunk Austrian theories, as some are merely descriptive, and allow the reader to understand what the Austrians believe. Some posts examine the history of the school. A few posts are even constructive in that Post Keynesians and some Austrians can agree on certain points (such as the posts on Ludwig Lachmann).

In my view, a useful division of modern Austrians would be as follows:

(1) The History, Classification, and Subgroups of Austrian Economics(2) Debunking Austrian Apriorism and Praxeology(3) Ludwig Lachmann and Radical Subjectivism(4) Against the Pure Time Preference Theory of Interest Rates(5) Against Say’s Law(6) Austrians and the Concept of Uncertainty(7) Against the Austrian Theory of Money(8) Against Mises’s Regression Theorem(9) Against the Austrian View of Deflation(10) Against the Austrian Theory of Inflation(11) Austrian and GDP(12) Against Vulgar Austrians(13) Hayek’s Bigotry and Support for Authoritarianism Exposed(14) Hayek’s Interventionism(15) Austrian Myths on Government Debt(16) Questionable or Failed Austrian Predictions (17) Against Free Trade / Law of Ricardian Association(18) Against Austrian Interpretations of the Great Depression(19) Austrian Myths about the 19th century Gold Standard Era(20) Austrians Misrepresent the Post-1945 Boom in America(21) Against Rothbard (22) Against Ron Paul(23) Austrian Myths about Ancient Rome(24) Austrian Misrepresentations of Keynesianism(25) Austrian Misrepresentations of Modern Monetary Theory(26) Austrians and Equilibrium Theory(27) Debunking Austrian Ethical Theories(28) Mises and Fascism(29) Keynes and Hayek(30) Debunking the Austrians on the Recession of 1920–1921(31) Fractional Reserve Banking is not Fraud (against the Rothbardians) (32) Against the Austrian Business Cycle Theory (ABCT)(33) The Socialist Calculation Debate(34) Against the Austrian Theory of Prices(35) Free Bankers misunderstand Hayek’s Liquidationism(36) Against Misesian Economic Coordination and Calculation(37) Against Free Banking(38) Against Robert Murphy(39) Keynesian versus Austrian Debate(40) Against Rothbardian Notions of Justice(41) Probability Theory(42) Mises and Freudian Pseudoscience(43) Austrians and Prediction(44) Austrians and Open Borders(45) Against Privatised Roads(46) Mises on War

(9) Against the Austrian View of Deflation
Some Austrians think deflation is desirable; others do not. Hayek most notably changed his mind and condemned “secondary deflation.” The Austrians hold inconsistent views on deflation.

(27) Debunking Austrian Ethical Theories
There are at least two positions taken by Austrians on ethics: (1) some (like Mises) support a kind of utilitarianism/consequentialism, and (2) others support natural rights (Rothbard) or argumentation ethics (Hoppe).

If I were to teach economics, I might (ask the author to let me) use these posts as the main body of references.

LK's superb material would be equally valuable as an introduction to fundamental problems of economics (on an appropriately deep level, which every student should be exposed to, as the lack of such depth is what spoils economics), or in a course on Austrian economics, or in a course on Post-Keynesian Economics - other applications are surely possible.

Never ever study Austrian economics without confronting your thinking with these sources.

They have helped me clarify much that was muddled and confused in my views on Austrian economics (and indeed, economics in general).

LK is a remarkably precise thinker with an admirable ability to come up with pertinent sources beyond his own inspiring thoughts.

An excellent economist, I strongly suspect he is a trained philosopher, as he brings to the economic conversation the skills sorely missed in most economists: sophisticated philosophical discernment - just go to the posts on apriorism to get a sense of what I mean.